Study: Many unknowns but gas could mean Ill. jobs

Dec. 14, 2012

Written by

David Mercer

Associated Press

CHAMPAIGN, ILL. — The New Albany Shale formation in southern Illinois could produce anywhere from a few thousand jobs to more than 40,000 jobs, but too little is known about the formation to be sure, according to a study paid for by the Illinois Chamber of Commerce.

The study, conducted by an Illinois State University economist, was released Thursday. The chamber said it hopes the work helps shape legislation that lawmakers currently are working on to regulate controversial drilling techniques, such as hydraulic fracturing. The study focused on shale gas production, not oil.

And the state Geological Survey’s director said Thursday — even as petroleum industry land men scramble to find parcels of land to explore — there’s at least some reason to think the shale formation might never be a major producer of shale gas.

The study by economist David Loomis acknowledges the unknowns about the formation and how productive it might be. But the exploration and, if it happens, subsequent production could generate anywhere from about 1,000 jobs and $1 billion for the state to more than 47,000 jobs and $9 billion.

“That high-end number seems quite reasonable to what other states have already experienced,” he said, referring to shale formations in states such as Pennsylvania that are now producing high quantities of natural gas. “We feel like these are very conservative estimates of the impact that could come from shale gas.”

Chamber member Tom Wolf said the business group hopes lawmakers consider those potential effects as they work on Senate Bill 3280. The legislation would set up regulations for hydraulic fracturing, which detractors call fracking, and other drilling techniques that would be used to explore the New Albany formation.

“The industry’s at the table because they want a road map that helps them in the long term,” Wolf said, adding that the oil and gas industry hopes to talk the state out of setting fees to mitigate wear and tear on roads and impacts on the environment before it knows what the formation might produce. “What I’m trying to avoid is impact fees and taxes based on the hope that this (drilling) will come about and that would scare people away.”

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Illinois Geological Survey Director Don McKay cautioned that the formation may never be capable of producing a boom, based on the work of the agency’s recently retired expert on the subject, David Morse.

“His assessment is that our New Albany Shale resource in Illinois probably doesn’t contain a lot of gas,” McKay said. “Our shale because of its geological history was not subjected to the high temperatures for the long range of time that would be required.”

Recent advances in hydraulic fracturing and other techniques have spurred interest in Illinois’ portion of the New Albany Shale, about 5,000 feet beneath far southwestern Illinois. Federal government estimates put the shale’s potential production at levels far below those in boom areas such as the Marcellus Shale in Pennsylvania.

But the interest in the industry has spurred talk from both lawmakers and critics about the drilling techniques, which environmental groups say can pollute water supplies.

The Sierra Club, which has pushed for strong regulation in Illinois, did not immediately respond to a request for comment Thursday. Others, like the grassroots group Southern Illinoisans Against Fracturing our Environment, want fracking banned until its environmental consequences are sorted out. That group also didn’t immediately respond to a call for comment.

The state Senate passed SB 3280 earlier this year but the House never acted. The bill is being amended, said McKay, who is part of a group that’s looking at the legislation. The bill’s sponsor, state Sen. Mike Frerichs, a Democrat from Gifford in eastern Illinois, did not immediately respond to a request for comment.

Wolf said early versions of the legislation included provisions the industry couldn’t live with, such as not drilling a thousand feet or more away from surface water.

Neither Wolf nor McKay knew how quickly the legislation could move next year in Springfield.

“The ‘white smoke’ from Springfield could be days, weeks or months ahead,” Wolf said. “I hope it’s one of the first two options.”